1. Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University, Fundação Getúlio Vargas and CFO magazine Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 1

2. Top Concerns for Latin American CFOs Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 2 1.Government policies 2.Economic Uncertainty 3.Regulatory requirements 4.Cost of benefits 5.Weak demand for product/services 6.Inflation 7.Rising wages and salaries 8.Currency risk 9.Corporate tax code 10.Attracting and retaining qualified employees

3. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Business Optimism Index Global Trends Country / Region Dec 2014 Response 3 Notes: Presented data are the mean value for each region or country, Scale from 0-100 Country Business Optimism Index Own-Firm Business Optimism Index Own Company CFO business climate optimism remains low, optimism about own company is much higher.

4. Expected Increase in Product Prices Notes: Presented data are the mean values for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 4 Product Prices Latin American Inflationary expectations are lower this quarter. Global TrendsDec 2014 Outlook Inflation expectations decrease in Latin America  Latin American CFOs expect the prices of their firm’s products and services to increase by 2.3% in 2015  CFOs in Europe and Asia also expect inflation to temper, US CFOs expect stable product prices. Inflation expectations high in Brazil and Ecuador  Of responding countries, Ecuador has the highest inflationary expectations, followed by Brazil.  Prices are expected to increase slowly in Peru.

5. Expected Growth in Sales Revenue Global TrendsDec 2014 Outlook Revenue Notes: Presented data are the mean value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 5 Latin American CFOs expect rapid top line growth, anticipating a 9.0% increase in revenues during 2015. Latin American revenue growth up  Expectations up from last quarter, when L.A. CFOs expected revenue growth of less than 6%  Latin American revenue growth expected to be slightly lower than Asia but greater than other regions. Asian companies expect fastest growth  Asia expects the highest sales revenue growth in 2015, while Europe anticipates the lowest.  Among responding L.A. countries, revenues in Mexico will grow the fastest, followed by Ecuador, Peru and Brazil.

6. Global Trends Capital Spending Dec 2014 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 6 Expected Increase in Capital Spending Notes: Presented data are the mean value for each region or country. Latin American capital spending is expected to increase 2.0% in 2015 Capital spending growth remains low  Latin American expects business spending to increase by only 2%, below spending in other parts of the world  Capital spending plans are also low in Africa, declining to 2% growth Business spending varies within Latin America  Capital spending will grow strongly in Ecuador but decline in Brazil and grow only slowly in Chile.  Business spending is strong in the US and Asia.

7. Global TrendsDec 2014 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 7 Expected Change in Earnings Notes: Presented data are the mean public company value for each region or country. Earnings Earnings expected to rebound in 2015 Earnings growth to rebound next year in L.A.  Latin American earnings growth fell from 13.4% in 2014Q1 to -0.3% in 2014Q3, but rebounds this quarter to 11.2%  US, Asian and African earnings growth decreases. Europe expects mild growth in earnings. Weaker earnings in surveyed Latam countries  Chile and Mexico expect earnings to rebound in 2015 from very low levels this past year  Earnings expectations are moderate in Peru and modest in Brazil

8. Global Trends # FT Employees Dec 2014 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 8 Moderate Increase in Fulltime Employment Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees Latin American CFOs expect to increase fulltime domestic employment by only 1.3% in 2015 Employment growth moderates in Latin America  While Latam CFOs expect modest employment growth in the next year, workforce increases should still outpace Europe.  Europe expects little if any growth; Africa and Asia expect strong employment growth Employment declines expected in Brazil  Brazil expects reductions in fulltime employment.  Employment will grow about 3% in Ecuador and 2.5% in Peru and Mexico.

9. Global Trends Wages & Salaries Dec 2014 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 9 Expected Wage and Salary Increase Notes: Presented data are the mean value for each region or country Wages and salaries are projected to increase by 5.9% in Latin America, slightly lower than Africa and Asia. Rapid wage growth in emerging economies  Latin America, Asia, and Africa all expect wages to rise around 6%, which is higher than the overall inflationary expectations in LA and Africa  The US and Europe expect wages to grow by around 3% Wages to soar in Brazil and Ecuador  In line with high product market inflation, companies in Brazil expect to increase wages and salaries by 8.9% in 2015, followed by Ecuador (5%)  In Peru, Chile and Mexico, wage hikes will be around 3.5%.

10. Important Qualities of Board Directors Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 10 Industry and C-level managing experience are expected qualities of board directors  In addition to industry experience and as a C-level manager, companies like directors who are outside- the-box thinkers.  People skills are also sought after. What are the most important qualities for members of your board of directors? (Choose 3)

11. Composition of the Board of Directors Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 11 Only 6.8% of Latin American firms have specific goals or guidelines for the mix of men/women/minorities on the board.  Many boards fall short of their gender and minority targets. What is the target (current) composition of your board for men, women and minorities?

12. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Percentage of Millennial Employees 12 To the best of your knowledge, approximately what percentage of your company's employees are “Millennials” (under the age of 35)? Asia has the highest percentage of Millennial workers, followed by Latin America.  In Asia, around 44% of the workforce are Millennials, followed by 41.8% in Latin America.  US and Europe have the lowest level of Millennial workers, fewer than 30%.  Chile has the lowest proportion of Millennial workers within L.A.

13. Advantages of Employing Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 13 Millennials are valued for their technological and creative abilities  Employing Millennials can save firm costs in terms of salary.  Few firms consider Millennials to be more efficient workers. What are the primary advantages of employing Millennials under age 35?

14. Challenges Related to Employing Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 14 Firms consider Millennials to be less loyal to the company and more interested in individual professional development than in the company  Millennials require more management oversight and demand changes in corporate culture  Around 10% of firms concerned about the Me-first attitude of Millennials. What are the primary challenges related to employing Millennials (under age 35)?

15. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Make Changes to Retain or Recruit Millennials 15 Has your company made any changes in an effort to retain or recruit Millennials (under age 35)? Asia and Latin America have implemented the most changes to recruit or retain Millennials.  More than 60% of Asian and Latin CFOs say they have made changes in an effort to retain or recruit Millennials, consistent with the fact that Millennials are a larger proportion of workforce in these regions.  US, African, and European firms are less accommodating to Millennials.

16. Changes Made to Retain or Recruit Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 16 Firms redefine work hours and implement social responsibility policies for Millennials.  Firms redefine work hours to be more flexible, implement social responsibility policy and redefine company culture to retain and recruit Millennials.  Firms also implement new training and mentoring programs for Millennials. Has your company made any of the following changes in an effort to retain or recruit Millennials (under age 35)? Among firms that have made changes:

17. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Return on Assets (ROA) 17 Profit growth varies by country in Latin America Profit margins are expected to rise in all regions, relative to 2014 profits, but not less so Brazil and Chile  ROA expectations have declined in Brazil and Chile  CFOs in Latin America generally expect modest ROA improvement

18. Duke/FGV CFO Survey in Latin America Press Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 18 The Latin American Business Outlook is frequently reported in the press

19. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 19 Duke/FGV CFO Survey in Latin America Press The Latin American Business Outlook is frequently reported in the press

20. Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University, Fundação Getúlio Vargas and CFO magazine Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 20

21. OLD SLIDES 21 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

22. From September 2014 22 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

23. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Percentage of Workforce Earning Minimum Wage 23 Approximately what percentage of your primary workforce currently earns minimum wage? Asia has the highest percentage of workers earning minimum wage, followed by Africa.  Asia has more than 37% of the workforce earning minimum wage, followed by Africa’s 15.1%  About 8% of Latin America workers earn minimum wage, similar to the US and Europe.  Brazil has the lowest proportion of workers earning minimum wage.

24. Effect of Increasing Minimum Wage Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 24 Increasing the minimum wage would have multiple, offsetting effects  Firms would shift away from labor towards machines and pass the higher wages along to consumers in the form of higher product prices.  Higher wages would also increase worker productivity and employee turnover For your primary workforce, what would be the effect on your firm if the required minimum wage per hour were to increase by 40%? Would your company...

25. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Labor-Reducing Capital Investments 25 Has your company made or are you planning to make capital investments aimed at reducing the amount of labor needed at your company? Latin America has the highest intention to switch to labor-saving technologies  55% of the Latin CFOs say they have made or plan to make capital investment aimed at reducing the amount of labor needed, in effect shifting from labor towards robots  African CFOs have the least intention to switch to labor-saving technologies, perhaps reflecting low African wages. Protective labor laws reduce labor-saving techniques in Europe.

26. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Political Contributions 26 Does your company make political contributions? (Reported data are for firms located in countries that allow corporate political contributions) Most firms in emerging economies do not make political contributions  More than 50% of the European firms make political contributions, according to the survey respondents.  Latin American firms has the lowest rate of making political contributions.

27. Reasons for Making Political Contributions Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 27 What are the most important reasons that your company makes political contributions?

28. Managing Corporate Tax Exposure Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 28 Companies overwhelmingly agree that managing corporate tax exposure is important  Taxes affect business strategies and where to locate operations Do you Agree or Disagree the following statements about managing your company's corporate tax exposure.

29. From June 2014 29 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

30. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Intention to Deploy Cash Reserves 30 Is it likely that your firm will begin to deploy its cash reserves during the next 12 months? Most firms in emerging economies expect to use their cash reserves in the coming year  Due to good long-run investment opportunities, 72% of Latin American firms will deploy cash reserves  Only about half of US and European companies will spend out of cash reserves in the coming year

31. If deploying cash reserves, on what? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 31 72% of Latin American firms plan to spend their cash reserves in the next 12 months. Among these firms …  More than half will use the cash for business spending and investment, one-fourth to make acquisitions  Nearly 40% will use excess cash to pay down debt.  More than one-fourth need cash to cover operating losses or purchase raw materials

32. If not deploying cash, why not? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 32 28% of Latin American firms are NOT planning to spend cash reserves. Among these firms …  Nearly 30% say they lack excess cash to spend; another 30% say they have alternative sources of funds  Nearly 30% also indicate that they need to hold their cash reserve in case a liquidity need arises

33. Explicit Target for Cash 33 Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 As your firm decides how much cash to hold, do you have an explicit "target" or "range" for the amount of cash and marketable securities to hold? About half of LA and Asian firms indicate that they maintain a specific target for how much cash to hold  Though not shown on this graph, if cash drifts below the target, they quickly try to increase cash holdings  If cash accumulates above the cash target, most LA firms move only slowly to decrease cash holdings

34. 34 Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Russian Business Connections in Latin America Has your company reduced your Russian-related activity? Though not shown on this graph, Latin American businesses are the least exposed to Russia in the world  Left: Among surveyed firms, none indicated they have pulled out of Russia, only a few evaluating  Right: Few Latin American firms indicate that severe sanctions on Russia would harm their prospects What would the impact be on your country's economy if severe financial sanctions were imposed (including restrictions in intra- bank transactions through the SWIFT system) on Russia as a result of activity in Ukraine?

35. Labor Unrest 35 Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Do you expect labor unrest (e.g,. strikes, work stoppages) to affect your country's economy over the next 12 months? Three-fourths of Latin American firms expect labor unrest during the next 12 months  LA concerns about labor unrest are by far the highest in the world; few US firms share this concern  Though not shown on this graph, Brazil (85%) has the highest concern about labor unrest of any surveyed country in the world

36. What is the cause of labor unrest? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 36 General problems associated with slowing economic growth are the biggest cause of labor unrest in LA  Wage pressures, in part due to high inflation, are the second biggest cause of unrest.  Working conditions are not a major concern in LA. Though not on the graph, poor working conditions lead to labor unrest in China. If you expect labor unrest (e.g,. strikes, work stoppages) to affect your country's economy over the next 12 month, the unrest is driven by?

37. From Mar 2014 37 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

38. Merger and Acquisition Activity Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 38 As a region, Latin American M&A potential activity trails that of the US, Europe & Asia. About 23% of Latam CFOs expect their firms to make an acquisition in the next year World-wide, slightly more than one-fourth of companies expect to acquire assets of another firm  M&A activity is comparatively lower in Latin America, especially in Peru where only 16% of firms expect to acquire. M&A activity will be highest in Europe and lowest in AFrica.  European firms are the most likely to plan an international acquisition. Among surveyed Latam firms, CFOs in Chile are the most likely to make a cross-border acquisition.

39. Where will cross-border acquisitions occur? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 39 International acquisitions in Latin America will target companies operating in another Latam country, followed by North American targets. Latam acquisitions mostly regional, overlooking Asia:  Latin American CFOS express very little if any interest in acquiring Asian firms, focusing instead on the Americas  The U.S./Canada is the region most likely to plan to acquire a Latin American target.  Most regions focus their international acquisitions on firms in their own continent

40. Effects of Tighter U.S. FED Monetary Policy Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 40 What effect, if any, has the U.S. Federal Reserve Bank's plan to taper its quantitative easing program had on your company's optimism about its business prospects for 2014? Emerging economics are more wary of U.S. monetary tightening than are U.S. companies  Only 1-in-5 U.S. companies expects direct negative effects from the FED tightening monetary policy  More CFOs in emerging regions are wary of FED tightening, probably because higher U.S. interest rates may lead to either higher emerging economy interest rates and/or depreciated emerging country currencies

41. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Effects of Uncertain Economic Conditions 41 Does Uncertainty about Economic Conditions Affect Your Business Planning? Growing uncertainty about economic conditions slows hiring and spending plans  Because Latin American CFOs have grown more uncertain about economic prospects, many are adopting a “wait and see” attitude in their own business plans  More than half of Latam companies have reduced hiring and spending plans due to economic uncertainty

42. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 Effects of Uncertainty About Government Policies 42 Does Uncertainty about Government Economic Policies Affect Your Business Planning? Growing uncertainty about government policies reduces hiring and business spending  Because Latin American CFOs have grown more uncertain about future government policies, many are adopting a “wait and see” attitude in their hiring and capital spending plans  Though not shown in this graph, concerns about government policies are acute in Chile and Brazil

43. Corporate Culture Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 43 In both Latin America and in the U.S., customer-orientation and integrity are two primary aspects of corporate culture More similarities than differences in Corporate Culture  Still, Latin American CFOs put somewhat more emphasis on results (near-term and strategic) and somewhat less emphasis on customer orientation and integrity.

44. Planned Changes to Corporate Culture Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 44 Latin American CFOs plan to put more emphasis on strategic (long-term) results  Nearly 30% of Latam companies indicate that they will increase strategic focus, while nearly 25% say more focus on customer orientation  Though not shown in the graph, most Latam CFOs say that it is very important for their employees to understand the corporate culture. What is the primary focus of changes in corporate culture among Latin American firms?

45. Real Estate Bubbles? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2014 45 Approximately 50% of Latin American CFOs believe there is a real-estate bubble in the region compared to 70% in Asia, and 90% in China Real Estate Bubbles are significant concerns in Latin America and Asia  More than half of CFOs in Brazil and Peru indicate that they believe there is a real estate bubble in their home countries. A bursting bubble like what occurred in the U.S. in 2008-2010 could slow economic growth  An astounding 90% of Chinese CFOs believe China has a real estate bubble, and (though not shown in the graph) 30% think the Chinese bubble will burst in 2014